Baron Health Care Fund Repurchased UnitedHealth Group Incorporated (UNH) in Q3. Here's Why

Baron Funds, an investment management company, released its “Baron Health Care Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund rose 5.39% (Institutional Shares) in the quarter, compared to a 5.05% gain for the Russell 3000 Health Care Index (benchmark) and an 8.18% gain for the Russell 3000 Index (the Index). The Fund performed similarly to the Benchmark this quarter. Solid stock selection was primarily offset by negative effects from active sub-industry allocations and cash holdings during a rising market. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Health Care Fund highlighted stocks such as UnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company that operates through UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx segments. The one-month return of UnitedHealth Group Incorporated (NYSE:UNH) was -4.80%, and its shares lost 38.76% of their value over the last 52 weeks. On October 31, 2025, UnitedHealth Group Incorporated (NYSE:UNH) stock closed at $341.56 per share, with a market capitalization of $309.398 billion.

Baron Health Care Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its third quarter 2025 investor letter:

"We repurchased shares of UnitedHealth Group Incorporated (NYSE:UNH), a leading managed health care company. After a series of setbacks, the company now has new management in place and has reset earnings guidance for 2025. Although many challenges remain, including persistently high medical cost trends, rate pressure, the threat of Pharmacy Benefit Manager reform, and ongoing government investigations, the company continues to have competitive advantages including scale, data, vertical integration with service providers, and leadership in Medicare Advantage and value-based care. We see an attractive business trading at close to a 10-year low relative valuation with potential for valuation expansion as earnings recover from depressed levels."

UnitedHealth Group Incorporated (NYSE:UNH) is in the 18th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 159 hedge fund portfolios held UnitedHealth Group Incorporated (NYSE:UNH) at the end of the second quarter, which was 139 in the previous quarter. In the third quarter of 2025, UnitedHealth Group Incorporated (NYSE:UNH) generated revenues exceeding $113 billion, representing a 12% year-over-year growth due to the expansion of domestic memberships. While we acknowledge the potential of UnitedHealth Group Incorporated (NYSE:UNH) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered UnitedHealth Group Incorporated (NYSE:UNH) and shared Bretton Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.